Financial Management, 30 Credits

Contents

This finance course is intended for students who want to increase their familiarity with the practical applications of financial management. The four modules provide students with an opportunity to acquire a high level of expertise in central areas of financial management of firms, covering topics such as firm valuation, financing, investments, as well as risk management. While each of the modules cover different aspects of the financial management of companies, module 1-3 constitute the basis for the understanding of the fourth module.
The course is given and examined in English.

• Module 1. Advanced Financial Statement Analysis and Valuation, 7,5 credits
• Module 2. Advanced Corporate Finance, 7.5 credits
• Module 3. Investments, 7.5 credits
• Module 4. Risk Management, 7.5 credits

The course has a number of goals for the development of generic skills. After completing the course, the student should be able to:

• analyze and frame problems in the financial area
• understand and evaluate financial management related issues from an ethical perspective
• work effectively in team environments
• plan, conduct, and present investigations, both orally and in writing

Common expected learning outcome:

• communicate central concepts for the course in English, both orally and in writing

Module 1. Advanced Financial Statement Analysis and Valuation, 7.5 credits

The module aims to provide students with relevant theories, methods and models for valuing companies and their securities, primarily equity (common stock). The module deals with the analysis of financial statement information and the use of this information for business strategy analysis, performance evaluation and investment decisions. Accounting and discounted cash flow approaches to valuation are discussed as are forecasting of dividends, earnings, cash flows and pro forma analyses. During the module, students will also be introduced to the code of academic conduct, e.g. referencing and avoidance of plagiarism and cheating.

Expected learning outcomes:
After successful completion of the module, the student should be able to:

• value the equity, operations and debt of companies using different valuation approaches/models and financial statement information
• analyze and reformulate financial statements to identify a firm's business strategy and value drivers so as to facilitate forecasting and valuation
• analyze market prices, value drivers and financial measures, e.g., profitability, growth, P/B and P/E ratios, and their relations to estimated fundamental value
• explain the relations between accounting standards, e.g. IFRS and US GAAP, accounting methods and value
• integrate environmental, social and corporate governance (ESG) factors into equity valuation
• understand and be able to apply an academic approach to avoid plagiarism in academic work.

Focus of instruction
Learning is supported by lectures, seminars, literature i.e. textbook and research articles, cases and projects. Students are introduced to academic conduct, for example how cheating and plagiarism can be avoided and referencing techniques. 

Examination modes
Examination is based on an individual written hall exam, multiple choice tests and an individual computer-based examination on plagiarism and referencing. A passing grade is required for examination in the module. The course is given and examined in English. Note as well examination modes below for the course as a whole.

Module 2.   Advanced Corporate Finance, 7.5 credits
The primary purpose of this module is to provide an integrated overview of the most important concepts in Corporate Finance, both in theory and in practise and in some cases even methodologically. The subject extends the student's knowledge about the context in which corporations operate. Topics to be covered in this module include capital market imperfections and methods developed in finance to control risk and reduce uncertainty in the financial management of corporations. Issues in corporate policy and strategy, based on theoretical developments in finance are presented. Students will learn the processes involved in the valuation of debt and equity and the methods that have been used to manipulate external perceptions of business outcomes.During the module, students will also be introduced to methods of working in international teams.

Expected learning outcomes
After completing this module, the student should be able to:

• assess the impact of information asymmetry on corporate financial policy decisions from the selection of particular modes of financing to dealing with the problems associated with financial distress
• explain the theoretical basis and applicable strategies applied in regard to issues of corporate control
• compare and contrast leverage strategies in ideal versus real capital markets and be able to explain the expected impact of alternative taxation systems on the use of debt in a firm's capital structure
• argue for optimal levels of corporate debt and/or equity and be able to value an offering of either, under different financing strategies
• reflect upon Sustainable finance in relation to Corporate Finance

Focus of instruction
Learning is supported by lectures, as well as in smaller group workshops and seminars.

Examination modes
Examination is based on a written individual hall exam and group assignments. A passing grade is required for each part of the module. Note as well examination modes for the course below.

Module 3. Investments, 7.5 credits
Students undertaking the Investments module are provided with an opportunity to learn relevant theories and models to acquire a specialization at an advanced level in investment analysis. In the module fixed income securities are reviewed in terms of valuation and portfolio management. This includes coverage of concepts as duration analysis, convexity and immunization. Derivative securities (options, futures, swaps and convertibles securities), their pricing and relevant parity-relationships are emphasized and studied within the module. The creation of synthetic securities and the construction and maintenance of various hedging strategies for both portfolios and individual securities using different derivatives are also discussed. The concept of Value at risk, an essential tool for modern risk management, is further covered in the context of investment management. The module, finally, also include coverage of portfolio management strategies and measurement of portfolio performance.

Expected learning outcomes
After completing the module, the student should be able to:

• value fixed income securities and measure their associated risk.
• analyze active and passive portfolio management techniques to fixed income securities
• explain and analyze the development of regulation for financial institutions
• calculate and apply value at risk (VaR), as well as, perform backtesting for individual securities and portfolios
• value derivatives and explain the use of these in hedging investments and their impact on potential return and risk
• evaluate portfolio performance using, for example, risk-adjusted metrics

Focus of instruction
Learning is supported by lectures, although seminars, cases and computer exercises utilizing Excel may also be used.

Examination modes
Examination is based on a written individual hall exam and a written group assignment. A passing grade is required for each part of the module. Note as well examination modes for the course below.

Module 4. Risk Management 7,5 credits
A general principal in finance is that there is a trade-off between expected return and risk. Minimizing the cost of risk to an optimum level unanimously means increasing the value of a firm. Much has happened in financial markets that has highlighted the importance of risk management in financial institutions. The module covers traditional risks such as market and credit risks, and then focuses on recent developments regarding liquidity, operational and model risks. It combines discussions around the concepts and mathematical approaches of volatility and Value at Risk and also highlights the role of trading, regulations and innovations. Students are focused on the way risks are managed by financial institutions, but many of the ideas are equally applicable to all kinds of businesses. The module contents are aligned with the FRM Certification, Exam Part 1, delivered by the Global Association of Risk Professionals (GARP)

Expected learning outcomes
After completing the module, the student should be able to

• integrate knowledge from a broad range of risk management concepts and techniques
• analyse the effects of Basel Accords and other types of regulation.
• demonstrate analytical and integrative skills in solving advanced tasks within strategic risk management
• integrate risk management within sustainable strategies
• produce detailed and coherent reports in matters related to assessing risk management in real-life financial institutions.
• understand and apply ethical/professional rules in learning and conduct
• evaluate own competence and own need for competence development in order to work with financial management

Focus of instruction
Learning is supported by lectures, seminars, case studies, guest lectures, with bank managers and course papers. The core topics will be covered by lectures and seminars, in which students will be expected to take an active part. Cases related to the topics will also be used. Students are required to make oral presentations at seminars and during case analyses and to submit written course papers. Students will write an individual reflection paper in which they will assess their current performance and identify their needs of further knowledge.

Examination modes
Examination is based upon a written individual hall exam and group assignments (written and/or orally). A passing grade is required for each part of the module. Note as well examination modes for the course below.

Expected learning outcomes

See each separate module.

Required Knowledge

Admitted to the program Master of Science in Industrial Engineering and Management, 300 credits at Umeå University. Passed 120 credits in the program where the course Finance and Management Accounting 7.5 credits (2FE174) should be included.

Form of instruction

See each separate module.

Examination modes

See each separate module and below.
 
The following grading system is used:
Pass with distinction (Väl godkänd, VG, 75% or more),
Pass (Godkänd, G, 50% or more)
and Fail (Underkänd U, less than 50%).
 
Grades on the course are awarded when the student has passed all examinations and compulsory course elements.

To receive the grade Pass with distinction (VG) in the 30 credits course consisting of four modules of the same size, the student must have achieved Pass with distinction (VG) in at least three out of four modules. In shorter courses for example 7,5 credit courses, 15 credit courses or 22,5 credits courses Pass with distinction (VG) is given when the student has achieved at least 75% of the total weighted points.

A student who does not pass the first examination will be offered an opportunity to sit a re- examination within two months. An additional examination opportunity is normally offered every academic year, one week prior to the start of the autumn term. If required by specific circumstances, other form of examination can be used. 

A student that has failed an examination on two occasions has a right to have another examiner or grading teacher appointed, unless there are special reasons against it. A written request addressed to the Director of Studies should be made no later than 14 days before the next examination opportunity. 

Adaptations 
Examiners may decide to deviate from the modes of assessment in the course syllabus. Individual adaptation of modes of assessment must give due consideration to the student's needs. The adaptation of modes of assessment must remain within the framework of the intended learning outcomes in the course syllabus. Students who require an adapted examination - and have received a decision on the right to support from the coordinator at the Student Services Office for students with disabilities - must submit a request to the department holding the course no later than 10 days before the examination. The examiner decides on the adaptation of the examination, after which the student will be notified. 

Academic integrity and cheating 
As a student, you are expected to act with academic integrity. This means writing and presenting within the limits of the academic rules and expectations communicated in the university's regulations and what is otherwise specified by the responsible department. Disciplinary action may be taken against students who use unauthorized help aids or in some other way try to mislead on a test or on another type of task for examination. Rules and regulations concerning the production of academic texts and correct referencing will be applicable to written assignments. Submitted material may be subject to plagiarism control. In addition, Umeå University rules and regulations for education and research apply.

Other regulations

Academic credit transfers are according to the University credit transfer regulations.

This course can not be included in the degree together with 2fe108,2fe180,2fe196